When lending to consumers buying existing properties banks lack an effective way of ensuring whether a building’s cladding is compliant, though valuers should note if an apartment has issues.
“As part of our valuations process we consider a range of factors including any issues relating to building safety and compliance as well as adverse impact to value and marketability,” the CBA statement said.
Westpac, Australia’s second largest bank, backed transparency for owners and said it took the “issues” around cladding “very seriously” but stopped short of backing a register.
“Transparency and clarity will give home owners and residents greater peace of mind, so we are very supportive of the property sector, government, and banks working together to solve this issue as quickly as possible,” Westpac said.
National Australia Bank and Australia and New Zealand Banking Group declined to comment.
Home buyer Edward Wilmoth purchased a two bedroom flat for $550,000 last November in Kensington, in Melbourne’s inner west, only to discover a few weeks before settlement in February that the three-storey building with nine apartments had been issued a “show cause” notice to remove flammable cladding.
The inspection, and confirmation, that the building was a fire risk was carried out months before Mr Wilmoth signed the sale contract, but was not disclosed on the Section 32 or owners corporation (OC) certificate for the property.
Section 32 clauses and OC certificates in real estate contracts are meant to inform purchasers about potential issues in the property they are purchasing.
“We weren’t sure if legally they were obligated to disclose that. And no one we sought advice from was convinced if we took it to court we could prove they knew about the inspection, or that if the OC manager knew, the owners should reasonably have known,” he said.
Mr Wilmouth said he now faced up to $8000 in fire engineer costs to plot a way forward and significant further costs, along with the other owners, to remediate the building.
“It’s a trail of blame but ultimately we’ve been lumped with the problem. I would have preferred there was a register and that it was legally required that a building that has been audited is required to be disclosed on the section 32,” he said.
Mr Wilmoth said he subsequently discovered the franchisee owners corporation manager for Melbourne Body Corporate Management (MBCM) had failed to inform owners of the problem.
“We’re investigating the claims,” MBCM chief executive Stephen Duggan said.
“That’s going to involve getting information from the franchisee. If there is anything that is wrong, we will certainly rectify any errors made by the franchisee.”
It’s a trail of blame but ultimately we’ve been lumped with the problem
Home-buyer Edward Wilmouth
In NSW, owners of buildings with external combustible cladding are required to register their building at a government-controlled online portal.
Buildings on the register are being investigated over whether the cladding poses a safety risk, and NSW Fair Trading recommends homebuyers find out as much as they can about a property before they buy.
“Real estate agents are required to disclose any material facts to prospective purchasers of a property, including the presence of combustible cladding,” a spokesman for the NSW cladding taskforce said.
“Buyers may also request to view records of their prospective strata scheme, including records of any cladding inspections or assessments commissioned by the owners’ corporation.”
In Victoria, the Andrews government has a list of affected buildings but has refused to disclose it publicly over privacy concerns and fears of “arson” incidents on buildings.
A Victorian government spokeswoman said potential buyers could contact the Victorian Building Authority to find out if a building they are looking to buy in has combustible cladding.
She also pointed to the Section 32 disclosure requirements.
“If it contains incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action against the buyer,” the statement read.
With Anthony Colangelo
Property Editor at The Age and BusinessDay journalist for Fairfax’s theage.com.au, smh.com.au, watoday.com.au and brisbanetimes.com.au.
Clancy Yeates is a business reporter.